Saturday, December 10, 2011

ivi TV Founder Todd Weaver: Fighting for the Future of Internet TV

One of the biggest stories of 2011 is what the future of television will look like as service providers, consumer electronics manufacturers and content aggregators all jockey for the prime position in your living room. One company seeking to help consumers "cut the cord" is Seattle-based ivi, an online cable company, and it's been embroiled in a lawsuit with broadcasters seeking to stop it from rebroadcasting their content online. Earlier this year in February, a New York federal judge ruled that ivi was infringing on broadcasters copyrights by not paying retransmission fees and ordered ivi to shut down.

Todd Weaver, CEO and founder of ivi, has been working on an appeal to overturn the ruling and says that ivi is not breaking the law, but fighting the same fight that as cable did when they first started and fought the broadcasters, and then satellite 25 years later fought the broadcasters and ivi is now the third source of distribution, fighting the broadcasters.

ivi launched its disruptive subscription-based Internet TV service in September 2010 as an alternative to cable and over-the-air TV. ivi TV subscribers could download ivi's player and pay $4.99 a month and had access to 70 channels of network TV stations – including ABC, NBC Universal, CBS and 60 other major network affiliated and owned-and-operated stations in New York, Los Angeles, Chicago and Seattle. However, a week after its launch, ivi received cease and desist letters from the major broadcasters claiming copyright infringement, and demanded immediate removal of the over-the-air channels.

Can ivi be defined as an Internet "cable system"?

Todd Weaver, CEO and founder of ivi, says that broadcasters are distorting their claim that his company is violating copyright law.

"The purpose of copyright law is to strike a balance between protecting copyright holders' rights and fostering innovative methods of disseminating the copyrighted works to the public," argues Weaver. "The ivi TV system was specifically designed to conform to the compulsory licensing provisions of the Copyright Act, which ensures that the networks' statutory copyright protections are maintained while simultaneously offering consumers a revolutionary new method to watch television." (From Ivi TV: Looking forward to moving court case along - FierceOnlineVideo)

Weaver says that ivi is an online cable company, according to the 1976 U.S. copyright law that defines a “cable system” which consists of “a facility” that “receives signals transmitted or programs broadcast by one or more television stations… and makes secondary transmissions of such signals or programs by wires, cables, microwaves, or other communications channels to subscribing members of the public who pay for such service.” (From Memo To TV Networks: FilmOn And ivi TV Are Different Companies | paidContent)

Weaver asserts that ivi pays royalties to the Copyright Office (the payment for a Section 111 compulsory license) and that Congress wrote the statute deliberately broad to accommodate new technologies.

"The U.S. Copyright Office is paid by 16,000 cable systems, including ivi, for a license that clearly states it is a non-infringing act to retransmit broadcast signals. That royalty payment is then dispersed to all the broadcasters whose signals were retransmitted. The license and payment gives every cable system the right to retransmit legally, including ivi. While the congressionally enacted U.S. Copyright Law defines ivi as a cable system and provides a license for legal retransmission, the FCC does not have a classification for ivi, due to the nature of ivi's Internet distribution. Even though ivi is in full compliance with copyright law, we don't have the same assurances and benefits as other cable companies because no category exists within the FCC to classify ivi at this time, a fact the FCC fully acknowledges." (From Copyright vs. FCC vs. The Industry: ivi.TV slices through a Gordian Knot - FierceIPTV)

I caught up with Weaver at OTT Con earlier this year where he discussed what the PayTV operator and online video experience will look like in the OTT era.

"Over-the-top, or OTT, has been an merging market for some time and that market has been stifled by a number of issues, and today, those issues primarily relate to content."

Weaver says that the industry has overcome the technical hurdles of content protection and delivery across multiple devices, and while issues of scale still persist, it's really content that has a number of hurdles to overcome for an OTT provider to carry it on the Internet. One of which is the percentage penetration, where content owners, like ESPN which the most expensive cable channel that's out there, or all the way down to the Hallmark channel which is the least expensive channel, are in various tiers that relate to percentage penetration, and the larger the percentage penetration a cable channel has the more it can charge, which in turn is passed along to subscribers. That's a bubble that's going to burst, says Weaver, and that's something existing OTT providers have to address.

"Do they adopt that model? Or do they have content owners agree to another model? Content owners actually control an awful lot of that, so do they want their content available on every single device, not protected or do they want it protected? The good news is that we're at least to the point when content owners are starting to consider this."

One fear that content owners are grappling with is the "cannibalization" of their existing cable TV subscriptions with their Internet subscriptions. As more content moves online, Weaver says, content owners will to figure out the pricing models and OTT providers are going to have to either educate or cooperate with content owners to set and adjust prices to help settle out the disturbance in that area.

It is obvious that the future of television is the Internet, says Weaver:

"The outcome is entirely related to contracts that the content owners have with their existing distribution, and the control in which they want to keep."

But there isn't a direct line in the sand drawn, he says, since different terms apply for the different content owners, since they all negotiate their contracts at different times. So there is no set date that all content will be available online across all devices.

"It is going to happen, that's an inevitability, the question is when, and when applies directly to what those contracts are."

ivi continues to fight the injunction from earlier this year and has Weaver appealed to Internet for help in a recorded message and launched campaign to raise funds for its legal battle on Indiegogo.com. Weaver says that the impact of its appeal will shape the future of Internet TV.

"Our case is going to decide if the Internet will compete with Cable and Satellite. If we win, all popular channels will be able to be carried on the Internet immediately and you can cancel your high cable bill and watch online. If we lose, the Internet will probably never compete directly with Cable and Satellite, and you will be stuck with your current cable company, forever paying outrageous fees for a lot of programming that you probably don't even watch."

About ivi

ivi TV endeavors to make the world a better place by providing a high-quality viewing experience while offering consumers what they want in the way they want it, with more choices, less hardware, and higher standards than other modes of online content delivery. At the same time, ivi TV increases eyeballs for channels and advertisers, continuing and adding to the live television tradition in an innovative and sustainable manner. Consumers, broadcasters and advertisers alike will agree that live television, most notably sports and news programming, is here to stay. The solution is ivi TV. And the time is now. ivi, Inc., is based in Seattle. For more information, please visit http://www.ivi.tv.

About Me

I'm President and Founder of Online Video Publishing [dot] com, a new media consulting firm sharing strategies and best practices for online
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